NCTA, Others Seek Stay of Bells Victory

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Washington -- The National Cable Television Association
last week asked a federal judge in Texas to suspend his decision that would allow the Baby
Bells to enter the long-distance market almost immediately.

The NCTA, joining long-distance carriers AT&T Corp. and
MCI Communications Corp. and other industry groups representing Bell competitors, told
U.S. District Judge Joe Kendall that Bell entry would 'convulse national
telecommunications markets' and 'derail' the competitive road map created
by Congress in the Telecommunications Act of 1996.

On Jan. 2, the NCTA asked for either a stay or a limited
stay to allow the U.S. Court of Appeals for the Fifth Circuit to decide whether to issue a
stay while the appeal is running. Four days later, the Justice Department and the Federal
Communications Commission made an identical request.

On Dec. 31, Kendall stunned the telecommunications world by
ruling that provisions of the 1996 law that keep the Bells out of long distance until they
have met various open-market requirements were unconstitutional.

Like the Eighth Circuit Court of Appeals order in July
throwing out federal guidelines on how rivals connect with local phone networks,
Kendall's order was especially painful to LDCs, which are trying to protect their
turf while gaining access to local phone customers.

AT&T predicted last week that it was 'extremely
likely' that Kendall's order would be stayed and that it would be overturned on
appeal. AT&T chairman Michael Armstrong said in a conference call that the Eighth
Circuit order and Kendall's ruling will effectively delay competition for local and
long-distance services. He said the regional Bell operating companies won't make
their networks available for resale on an economic basis until the law and rules are
settled.

'And the RBOCs are not going to be in the
long-distance business until they do open their markets,' he added.

Analysts said the court setbacks helped to push AT&T
into last week's decision to buy Teleport Communications Group, the competitive
local-exchange carrier controlled by three cable MSOs.

Kendall's decision first applied to SBC Communications
Inc. and U S West Communications Inc. Kendall last week expanded the list to include Bell
Atlantic Corp., but he declined to include Ameritech Corp., saying that the Bells'
request came too late.

Kendall held that the long-distance entry provisions were
bills of attainder, which Congress is forbidden from enacting under Article I of the
Constitution. A bill of attainder is a law that would punish a company without a fair
trial.

The punishment, Kendall held, was Baby Bell exclusion from
the long-distance market without a showing that they had violated antitrust laws.

The NCTA and the LDCs argued that the 1996 law was not a
form of punishment; on the contrary, they said the law made it easier for the Baby Bells
to enter long distance than the consent decree that kept the Baby Bells out of long
distance from the time of their creation in 1984.

The NCTA said it was appropriate for Congress to ensure
that the Baby Bells' local phone markets were open, and that they could not be used
to undermine long-distance competition.

'Drawing inferences about likely future conduct based
on market structure is entirely constitutional,' the NCTA told the judge.

Kent Gibbons contributed to this story.

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